Insurance 1-10 Digesttss CALANOC Vs

7/27/2019 Insurance 1-10 Digesttss CALANOC Vs

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CALANOC VS. COURT OF APPEALS, ET. AL.

98 PHIL 79 (G.R. NO. L-8151)

DECEMBER 16, 1995

Petitioner: Virginia CalanocRespondent: Court of Appeals and the

Philippine American Life Insurance Co.

J. Bautista Angelo:

FACT:

Melencio Basilio was a watchman of the Manila Auto Supply. He secured

a life insurance policy from the Philippine American Life Insurance

Company in the amount of 2,000.00 to which was attached a

supplementary contract covering death by accident. On January 25,

1951, he died of a gunshot wound on the occasion of a robbery

committed in the house of Atty. Ojeda. Virginia Calanoc, the widow, waspaid the sum of 2,000.00, face value of the policy, but when she

demanded the payment of additional sum of 2,000.00 representing the

value of the supplemental policy, the company refused alleging, as main

defense, that the deceased died because he was murdered by a person

who took part in the commission of the robbery and while making an

arrest as an officer of the law which contingencies were expressly

excluded in the contract and have the effect of exempting the company

from liability.

The widow then filed the collection suit in the Municipal Court ofManila, which rendered a favorable judgment. Philamlife (respondent)

appealed the case to the Court of First Instance of Manila which affirmed

the lower courts judgment. On appeal to the Court of Appeals, the court

reversed the decision of the two lower courts. Hence this petition for

review.

ISSUE:

Whether or not the insurer is correct in construing the ambiguity in its

favor.

HELD:While as a general rule the parties may limit the coverage of the policy

to certain particular accidents and risks or causes of loss, and may

expressly except other risks or causes of loss therefrom (45 C.J. S, 781

782), however, it is to be desired that the terms and phraseology of the

exception clause be clearly expressed so as to be within the easy grasp

and understanding of the insured, for if the terms are doubtful or


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obscure the same must of necessity be interpreted or resolved against

the one who has caused the obscurity. (Article 1377, new Civil Code.)

And so it has been generally held that the terms in an insurance policy,

which are ambiguous, equivocal, or uncertain * * * are to be construed

strictly and most strongly against the insurer, and liberally in favor ofthe insured so as to effect the dominant purpose of indemnity or

payment to the insured, especially where a forfeiture is involved (29

Am. Jur., 181), and the reason for this rule is that the insured usually

has no voice in the selection or arrangement of the words employed and

that the language of the contract is selected with great care and

deliberation by experts and legal advisers employed by, and acting

exclusively in the interest of, the insurance company. (44 C.J. S., p.

1174.)

Petitioner/Appellant: The Insular Life Assurance Company Ltd.

Respondent/Appellee: Emilia T. Biagtan, Juan T. Biagtan, Jr., Miguel T.

Biagtan, Gil T. Biagtan and Gracia T. Biagtan

J. Makalintal:

FACT:

Juan S. Biagtan was insured with defendant Insular Life Assurance

Company Ltd. for the sum of 5,000.00 and under

a supplementary contract denominated Accidental Death Benefit

Clause, for an additional sum of 5,000.00 if thedeath of the insuredresulted directly from bodily injury effected solely through external and

violent means sustained in an accident and independently of all other

causes. The clause, however, expressly provided that it would not apply

where death resulted from an injury intentionally inflicted by another

party.

On the night of May 20, 1964 or during the first hours of the following

day a band of robbers entered the house of the insured Juan Biagtan,

and that in committing the robbery, the robbers, on reaching the

staircase landing on the second floor, rushed towards the door of thesecond floor room, where they suddenly met a person who turned to

be insured who received nine wounds (five mortal wounds and four

non-mortal wounds) from their sharp pointed instruments resulting in

Mr. Biagtans death.

Beneficiaries of the insured then filed a claim under the policy the

insurance company paid the basic amount of 5,000.00 but refused to


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pay additional sum of 5,000.00 under the accidental benefit clause, on

the ground that the insureds death resulted from injuries intentionally

inflicted by third parties and therefore was not covered. (Respondent)

Beneficiaries then filed suit to recover in the CFI of Pangasinan who

rendered a decision in their favor. Hence the present appeal by thepetitioner.

ISSUE:

Whether under the facts stipulated and found by the trial court the

wounds received by the insured at the hands of the robbers were

inflicted intentionally, hence the benefit clause cannot apply.

HELD:

Under an Accidental Death Benefit Clause providing for an additional

sum of P5,000.00 if thedeath of the Insured resulted directly

from bodily injury effected solely through external and violent means

sustained in an accident and independently of all other causes butexpressly excepting therefrom a case where death resulted from an

injury intentionally inflicted by a third party, the insured who died

under the following circumstances is not entitled to the said additional

sum, to wit: That on the night while the said life policy

and supplementary contract were in full force and effect the house of

the insured . . . was robbed by a band of robbers who-were charged in

and convicted by the Court of First Instance of Pangasinan for robbery

with homicide; that in committing the robbery, the robbers, on reaching

the staircase landing of the second floor, rushed towards the doors ofthe second floor room, where they suddenly met a person near the door

of one of the rooms who turned out to be the insured . . . who received

thrusts from their sharp-pointed instruments, causing wounds on the

body . . . resulting in his death

FINMAN GENERAL ASSURANCE CORPORATION vs.THE HONORABLE

COURT OF APPEALS

213 SCRA 493, September 2, 1992

NOCON, J.:

FACTS:

On October 22, 1986, deceased, Carlie Surposa was insured with

petitioner Finman General Assurance Corporation with his parents,


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spouses Julia and Carlos Surposa, and brothers Christopher, Charles,

Chester and Clifton, all surnamed, Surposa, as beneficiaries. While said

insurance policy was in full force and effect, the insured, Carlie Surposa,

died on October 18, 1988 as a result of a stab wound inflicted by one of

the three (3) unidentified men. Private respondent and the otherbeneficiaries of said insurance policy filed a written notice of claim with

the petitioner insurance company which denied said claim contending

that murder and assault are not within the scope of the coverage of the

insurance policy. Private respondent filed a complaint with the

Insurance Commission which rendered a favorable response for the

respondent. The appellate court ruled likewise.

Petitioner filed this petition alleging grave abuse of discretion on

the part of the appellate court in applying the principle of "expresso

unius exclusio alterius" in a personal accident insurance policy, sincedeath resulting from murder and/or assault are impliedly excluded in

said insurance policy considering that the cause of death of the insured

was not accidental but rather a deliberate and intentional act of the

assailant. Therefore, said death was committed with deliberate intent

which, by the very nature of a personal accident insurance policy,

cannot be indemnified.

ISSUE: Whether or not the insurer is liable for the payment of the

insurance premiums

HELD:

Yes, the insurer is still liable.

Contracts of insurance are to be construed liberally in favor of the

insured and strictly against the insurer. Thus ambiguity in the words of

an insurance contract should be interpreted in favor of its beneficiary.

The terms "accident" and "accidental" as used in insurance contracts

have not acquired any technical meaning, and are construed by thecourts in their ordinary and common acceptation. Thus, the terms have

been taken to mean that which happen by chance or fortuitously,

without intention and design, and which is unexpected, unusual, and

unforeseen. Where the death or injury is not the natural or probable

result of the insured's voluntary act, or if something unforeseen occurs

in the doing of the act which produces the injury, the resulting death is


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within the protection of the policies insuring against death or injury

from accident. In the case at bar, it cannot be pretended that Carlie

Surposa died in the course of an assault or murder as a result of his

voluntary act considering the very nature of these crimes. Neither can it

be said that where was a capricious desire on the part of the accused toexpose his life to danger considering that he was just going home after

attending a festival.

Furthermore, the personal accident insurance policy involved

herein specifically enumerated only ten (10) circumstances wherein no

liability attaches to petitioner insurance company for any injury,

disability or loss suffered by the insured as a result of any of the

stimulated causes. The principle of " expresso unius exclusio alterius"

the mention of one thing implies the exclusion of another thing is

therefore applicable in the instant case since murder and assault, nothaving been expressly included in the enumeration of the circumstances

that would negate liability in said insurance policy cannot be considered

by implication to discharge the petitioner insurance company from

liability for, any injury, disability or loss suffered by the insured. Thus,

the failure of the petitioner insurance company to include death

resulting from murder or assault among the prohibited risks leads

inevitably to the conclusion that it did not intend to limit or exempt

itself from liability for such death.

Zenith Insurance Corporation vs. CA [G.R. No. 85296 May 14, 1990]

Facts: On January 25, 1983, private respondent Lawrence Fernandez

insured his car for "own damage" with petitioner Zenith

Insurance Corporation. On July 6, 1983, the car figured in an accident

and suffered actual damages in the amount of P3,640.00. After allegedly

being given a run around by Zenith for two (2) months, Fernandez filed

a complaint with the Regional Trial Court of Cebu for sum of money and

damages resulting from the refusal of Zenith to pay the amount claimed.

Aside from actual damages and interests, Fernandez also prayed for

moral damages in the amount of P10,000.00, exemplary damages of

P5,000.00, attorney's fees of P3,000.00 and litigation expenses of

P3,000.00.
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On September 28, 1983, Zenith filed an answer alleging that it offered to

pay the claim of Fernandez pursuant to the terms and conditions of the

contract which, the private respondent rejected. On June 4, 1986, a

decision was rendered by the trial court in favor of private respondentFernandez. On August 17, 1988, the Court of Appeals rendered its

decision affirming in toto the decision of thetrial court.

Issue:The propriety of the award of moral damages, exemplary

damages and attorney's fees is the main issue raised herein by

petitioner.

Held: The award of damages in case of unreasonable delay in

thepayment of insurance claims is governed by the Philippine Insurance

Code, which provides:

Sec. 244. In case of any litigation for the enforcement of any policy or

contract of insurance, it shall be the duty of the Commissioner or the

Court, as the case may be, to make a finding as to whether

thepayment of the claim of the insured has been unreasonably denied or

withheld; and in the affirmative case, the insurance company shall be

adjudged to pay damages which shall consist of attorney's fees and

other expenses incurred by the insured person by reason of such

unreasonable denial or withholding of payment plus interest of twicethe ceiling prescribed by the Monetary Board of the amount of the claim

due the insured, from the date following the time prescribed in section

two hundred forty-two or in section two hundred forty-three, as the

case may be, until the claim is fully satisfied; Provided, That the failure

to pay any such claim within the time prescribed in said sections shall

be considered prima facie evidence of unreasonable delay in payment.

It is clear that under the Insurance Code, in case of unreasonable delay

in the payment of the proceeds of an insurance policy, the damages thatmay be awarded are: 1) attorney's fees; 2) other expenses incurred by

the insured person by reason of such unreasonable denial or

withholding of payment; 3) interest at twice the ceiling prescribed by

the Monetary Board of the amount of the claim due the injured; and 4)

the amount of the claim.


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SUN INSURANCE OFFICE, LTD. VS. COURT OF APPEALS

211 SCRA 554 (G.R. NO. 92383)

JULY 17, 1992

Petitioner: Sun Insurance Office, Ltd.Respondent: Court of Appeals and Nerissa Lim

J. Cruz:

FACTS:

The petitioner issued personal accident insurance policy to Felix Lim Jr.

with a face value of 200,000.00. Two months later, he was dead with a

bullet wound in his head. As beneficiary, his wife Nerissa Lim sought

payment on the policy but her claim was rejected. The petitioner agreed

that there was no suicide. It agreed, however that there was no accident

either.

Pilar Nalagon, Lims secretary, was the only eyewitness to his death. Ithappened on October 6, 1982, at about 10 oclock in the evening, after

his mothers birthday party. According to Nalagon, Lim was in a happy

mood (but not drunk) and was playing with his handgun, from which he

had previously removed the magazine. As she watched television, he

stood in front of her and pointed the gun at her, She pushed it aside and

said it might be loaded. He assured her it was not and then pointed it to

his temple. The next moment there was an explosion and Lim slumped

to the floor. He was dead before he fell.

The widow sued the petitioner in the Regional Trial Court of ZamboangaCity and was sustained. The petitioner was sentenced to pay her

200,000.00, representing the face value of the policy, with interest at the

legal rate; 10,000.00 as moral damages; 5,000.00 as exemplary

damages; 5,000.00 as actual and compensatory damages; and

5,000.00 as attorneys fees, plus cost of the suit. This decision was

affirmed on appeal, and the motion for reconsideration was denied. The

petitioner then came to this Court to fault the Court of Appeals for

approving the payment of the claim and the award of damages.

ISSUE:Whether the policy relieves the insurer of the responsibility to pay the

indemnity agreed upon if the insured is shown to have contributed to

his accident.

HELD:

An accident is an event which happens without any human agency or, if

happening through human agency, an event which, under the


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circumstances, is unusual to and not expected by the person to whom it

happens. It has also been defined as an injury which happens by reason

of some violence or casualty to the insured without his design, consent,

or voluntary cooperation.

In light of these definitions, the Court is convinced that the incident thatresulted in Lims death was indeed an accident. The petitioner, invoking

the case of De la Cruz v. Capital Insurance, says that there is no accident

when a deliberate act is performed unless some additional, unexpected,

independent and unforeseen happening occurs which produces or

brings about their injury or death. There was such a happening. This

was the firing of the gun, which was the additional unexpected and

independent and unforeseen occurrence that led to the insured persons

death.

It should be noted at the outset that suicide and willful exposure to

needless peril are in pari materia because they both signify a disregardfor ones life. The only difference is in degree, as suicide imports a

positive act of ending such life whereas the second act indicates a

reckless risking of it that is almost suicidal in intent.

Lim was unquestionably negligent and that negligence cost him his own

life. But it should not prevent his widow from recovering from the

insurance policy he obtained precisely against accident. There is nothing

in the policy that relieves the insurer of the responsibility to pay the

indemnity agreed upon if the insured is shown to have contributed to

his own accident. Indeed, most accidents are caused by negligence.There are only four exceptions expressly made in the contract to relieve

the insurer from liability, and none of these exceptions is applicable in

the case at bar.

It bears noting that insurance contracts are as a rule supposed to be

interpreted liberally in favor of the assured. There is no reason to

deviate from this rule, especially in view of the circumstances of this

case as above analyzed.

JEWEL VILLACORTA vs. THE INSURANCE COMMISSION G.R. No. L-54171

BYADMIN ON 2010 LEAVE A COMMENT

JEWEL VILLACORTA vs. THE INSURANCE COMMISSION

G.R. No. L-54171, 28 October 1980 100 SCRA 467

FACTS:

Villacorta had her Colt Lancer car insured with Empire Insurance
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Company against own damage, theft and 3rd party liability. While the

car was in the repair shop, one of the employees of the said repair shop

took it out for a joyride after which it figured in a vehicular accident.

This resulted to the death of the driver and some of the passengers as

well as to extensivedamage to the car. Villacorta filed a claim for total loss with the said

insurance company. However, it denied the claim on the ground that the

accident did not fall within the provisions of the policy either for the

Own Damage or Theft coverage, invoking the policy provision on

Authorized Driver Clause. This was upheld by the Insurance

Commission further stating

that the car was not stolen and therefore not covered by the Theft

Clause because it is not evident that the person who took the car for a

joyride intends to permanently deprive the insured of his/ her car.

ISSUE:

Whether or not the insurer company should pay the said claim

HELD:

Yes. Where the insureds car iswrongfully taken without the insureds

consent from the car service and repair shop to whom it had been

entrusted for check-up and repairs (assuming that such taking was for a

joy ride, in the course of which it was totally smashed in an accident),

respondent insurer is liable and must pay insured for the total loss of

the insured vehicle under

the Theft Clause of the policy. Assuming, despite the totally inadequate

evidence, that the taking was temporary and for a joy ride, the Court

sustains as the better view that which holds that when a person, either

with the object of going to a certain place, or learning how to drive, or

enjoying a free ride, takes possession of a vehicle belonging to another,

without the consent of its owner, he is guilty of theft because by taking

possession of the personal property belonging to another and using it,

his intent to gain is evident since he derives there from utility,

satisfaction, enjoymet and pleasure. ACCORDINGLY, the appealeddecision is set aside and judgment is hereby rendered sentencing

private respondent to pay petitioner the sum of P35,000.00 with legal

interest from thefiling of the complaint until full payment is made and to

pay the costs of suit.

VDA. DE MAGLANA vs. CONSOLACION


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August 6, 1992

Romero, J.

RATIO DECIDENDI

The underlying reason behind the third party liability (TPL) of theCompulsory Motor Vehicle Liability Insurance is to protect injured

persons against the insolvency of the insured who causes such injury,

and to give such injured person a certain beneficial interest in the

proceeds of the policy.

FACTS

Petitioner: Figuracion Vda. De Maglana, Editha M. Cruz, Erlinda M.

Masesar, Leonila M. Mallari, Gilda Antonio and the minors

Maglana

Respondents: Honorable Francisco Consolacion, Presiding Judge ofDavao City Branch II and AFISCO Insurance Corporation

The nature of the liability of an insurer sued together with theinsured/operator-owner of a common carrier which figured in an

accident causing the death of a third person is sought to be

defined in this petition for certiorari.

Lope Maglana was an employee of the Bureau of Customs whosework station was at Lasa, Davao City.

On December 20, 1978, early morning, Lope Maglana was on hisway to his work station, driving a motorcycle owned by the

Bureau of Customs.

Subsequently, he met an accident that resulted in his death. Hedied on the spot.

The PUJ jeep that bumped the deceased was driven by Pepito Into,operated and owned by defendant Destrajo.

From the investigation conducted by the traffic investigator, thePUJ jeep was overtaking another passenger jeep that was going

towards the city poblacion. While overtaking, the PUJ jeep of defendant Destrajo running

abreast with the overtaken jeep, bumped the motorcycle driven

by the deceased who was going towards the direction of Lasa,

Davao City.

The point of impact was on the lane of the motorcycle and thedeceased was thrown from the road and met his untimely death.


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Consequently, the heirs of Lope Maglana filed an action fordamages and attorneys fees against operator Patricio Destrajo

and AFISCO. An information for homicide thru reckless

imprudence was also filed against Pepito Into.

During the pendency of the civil case, Into was held to be guilty ofhomicide thru reckless imprudence and was sentenced

accordingly.

Trial Court:

The trial court found that Destrajo had not exercised sufficientdiligence as the operator of the jeepney.

In the dispositive portion of the decision, it was expresslystipulated by the court that the defendant insurance company is

ordered to reimburse defendant Destrajo whatever amounts the

latter shall have paid only up to the extent of his insurance

coverage.

In denying the motions for reconsideration, the Court said thatsince the insurance contract is in the nature of suretyship, then

the liability of the insurer is secondary only up to the extent of the

insurance coverage.

Petitioners contention:

AFISCO should not merely be held secondarily liable because theInsurance Code provides that the insurers liability is direct andprimary and/or jointly and severally with the operator of the

vehicle, although only up to the extent of the insurance coverage.

Hence, the P20,000 coverage of the insurance policy issued byAFISCO should have been awarded in their favor.

The liability of the insurer is direct, primary and solidary with thejeepney operator because the petitioners became direct

beneficiaries under the provision of the policy which, in effect, is a

stipulationpour autrui.

Respondent AFISCOs contention

Since the Insurance Code does not expressly provide for a solidaryobligation, the presumption is that the obligation is joint.

ISSUE


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WON the liability of the insurance company is solidary with the jeepney

operator. NO.

HELD

The particular provision of the insurance policy on whichpetitioners base their claim is as follows:

Sec. 1 LIABILITY TO THE PUBLIC

1. The Company will, subject to the Limits of Liability, pay

all sums necessary to discharge liability of the insured in

respect of

(a) death of or bodily injury to any THIRD PARTY

(b) . . . .

2. . . . .

3. In the event of the death of any person entitled to

indemnity under this Policy, the Company will, in respect of

the liability incurred to such person indemnify his personal

representatives in terms of, and subject to the terms and

conditions hereof.

The above-quoted provision leads to no other conclusion but thatAFISCO can be held directly liable by petitioners.

Shafer vs. Judge, RTC of Olongapo City: Where an insurance policyinsures directly against liability, the insurers liability accrues

immediately upon the occurrence of the injury or even uponwhich the liability depends, and does not depend on the recovery

of judgment by the injured party against the insured.

The underlying reason behind the third party liability (TPL)of the Compulsory Motor Vehicle Liability Insurance is to

protect injured persons against the insolvency of the insured

who causes such injury, and to give such injured person a

certain beneficial interest in the proceeds of the policy.

AFISCO is not solidarily liable with Destrajo. Malayan Insurance Co., Inc. vs. Court of Appeals [issue as to thenature of the liability of the insurer and the insured vis--vis the

third party injured in an accident]: While it is true that where the

insurance contract provides for indemnity against liability to third

persons, such third persons can directly sue the insurer, however,

the direct liability of the insurer under indemnity contracts

against third party liability does not mean that the insurer can be


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held solidarily liable with the insured and/or the other parties

found at fault. The liability of the insurer is based on contract; that

of the insured is based on tort.

While in solidary obligations, the creditor may enforce the entireobligation against one of the solidary debtors, in an insurancecontract, the insurer undertakes for a consideration to indemnify

the insured against loss, damage or liability arising from an

unknown or contingent event.

Petitioners herein cannot validly claim that AFISCO, whoseliability under the insurance policy is also P20,000 can be held

solidarily liable with Destrajo for the total amount of P53,901.70.

Since under both the law and the insurance policy, AFISCOs

liability is only up to P20,000 the second paragraph of the

dispositive portion of the decision in question may have

unwittingly sown confusion among the petitioners and their

counsel. What should have been clearly stressed as to leave no

room for doubt was the liability of AFISCO under the explicit

terms of the insurance contract.

In fine, the Court concludes that the liability of AFISCO based onthe insurance contract is direct, but not solidary with that of

Destrajo which is based on Article 2180 of the Civil Code.

As such, petitioners have the option either to claim P15,000 fromAFISCO and the balance from Destrajo or enforce the entire

judgment from Destrajo subject to reimbursement from AFISCO tothe extent of the insurance coverage.

Perla Compania de Seguros, Inc. vs Honorable Court of Appealsand Milagros Cayas

G.R. No. 78860 May 28, 1990 FERNAN, C.J.: FACTS: Milagros Cayas was the registered owner of a Mazda bus. Said

passenger vehicle was insured with Perla Compania de Seguros,

Inc. (PCSI) under a policy issued on February 3, 1978. On

December 17, 1978, the bus figured in an accident in Naic, Cavite

injuring several of its passengers. One of them, 19-year old

Edgardo Perea, sued Milagros Cayas for damages in the Court of


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First Instance; while three others, namely: Rosario del Carmen,

Ricardo Magsarili and Charlie Antolin, agreed to a settlement of

P4,000.00 each. At the pre-trial, Milagros Cayas failed to appear

and hence, she was declared as in default. After trial, the court

rendered a decision in favor of Perea to compensate the Pereawith damages of Pl0,000.00 for medical fees; P10,000.00 for

exemplary damages; P5,000.00 for moral damages; P7,000.00 for

Attorney's fees.

On November 11, 1981, Milagros Cayas filed a complaint for a sumof money and damages against PCSI in the Court of First Instance.

Milagros Cayas filed a motion to declare PCSI in default for its

failure to file an answer. The motion was granted and Cayas was

allowed to adduce evidence ex-parte. On July 13, 1982, the court

rendered judgment by default ordering PCSI to pay Milagros

Cayas P50,000 as compensation for the injured passengers,

P5,000 as moral damages and P5,000 as attorney's fees.

Said decision was set aside after the PCSI filed a motion therefor.In due course, the court promulgated a decision in favor of Cayas,

but removed the award of moral damages.

PCSI appealed to the Court of Appeals, which, in its decision ofMay 8, 1987 the lower court's decision. Its motion for

reconsideration having been denied, PCSI filed the instant petition

charging the Court of Appeals with having erred in affirming in

toto the decision of the lower court. ISSUE: Whether or not the amount of award of damages was proper. RULING: NO. PCSI seeks to limit its liability only to the payment made by Cayas

to Perea and only up to the amount of P12,000.00. It altogether

denies liability for the payments made by Cayas to the other three(3) injured passengers Rosario del Carmen, Ricardo Magsarili and

Charlie Antolin in the amount of P4,000.00 each or a total of

P12,000.00.

The insurance policy involved explicitly limits PCSI's liability toP12,000.00 per person and to P50,000.00 per accident.


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We have ruled in Stokes vs. Malayan Insurance Co., Inc., that theterms of the contract constitute the measure of the insurer's

liability and compliance therewith is a condition precedent to the

insured's right of recovery from the insurer.

In the case at bar, the insurance policy clearly and categoricallyplaced PCSI's liability for all damages arising out of death or

bodily injury sustained by one person as a result of any one

accident at P12,000.00. Said amount complied with the minimum

fixed by the law then prevailing, Section 377 of Presidential

Decree No. 612 (which was retained by P.D. No. 1460, the

Insurance Code of 1978), which provided that the liability of land

transportation vehicle operators for bodily injuries sustained by a

passenger arising out of the use of their vehicles shall not be less

than P12,000. In other words, under the law, the minimum

liability is P12,000 per passenger. PCSI's liability under the

insurance contract not being less than P12,000.00, and therefore

not contrary to law, morals, good customs, public order or public

policy, said stipulation must be upheld as effective, valid and

binding as between the parties.

In like manner, we rule as valid and binding upon Cayas thecondition in the policy in requiring her to secure the written

permission of PCSI before effecting any payment in settlement of

any claim against her. There is nothing unreasonable, arbitrary or

objectionable in this stipulation as would warrant its nullification.The same was obviously designed to safeguard the insurer's

interest against collusion between the insured and the claimants.

In her cross-examination before the trial court, Milagros Cayasadmitted that PCSI did not give any written authority that Cayas

were supposed to pay those claims.

It being specifically required that PCSI's written consent be firstsecured before any payment in settlement of any claim could be

made, Cayas is precluded from seeking reimbursement of the

payments made to del Carmen, Magsarili and Antolin in view ofher failure to comply with the condition contained in the

insurance policy.

Clearly, the fundamental principle that contracts are respected asthe law between the contracting parties finds application in the

present case. Thus, it was error on the part of the trial and

appellate courts to have disregarded the stipulations of the


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parties and to have substituted their own interpretation of the

insurance policy.

We observe that although Milagros Cayas was able to prove a totalloss of only P44,000.00, PCSI was made liable for the amount of

P50,000.00, the maximum liability per accident stipulated in thepolicy. This is patent error. An insurance indemnity, being merely

an assistance or restitution insofar as can be fairly ascertained,

cannot be availed of by any accident victim or claimant as an

instrument of enrichment by reason of an accident.

WHEREFORE, the decision of the Court of Appeals is hereby

modified in that petitioner shall pay Milagros Cayas the amount of

Twelve Thousand Pesos (P12,000. 00) plus legal interest from the

promulgation of the decision of the lower court until it is fully

paid and attorney's fees in the amount of P5,000.00. No

pronouncement as to costs.

Geagonia v CA G.R. No. 114427 February 6, 1995

Facts:

Geagonia, owner of a store, obtained from Country Bankers fire

insurance policy for P100,000.00. The 1 year policy and covered

thestock trading of dry goods.

The policy noted the requirement that"3. The insured shall give notice to the Company of any insurance or

insurances already effected, or which may subsequently be effected,

covering any of the property or properties consisting of stocks in trade,

goods in process and/or inventories only hereby insured, and unless

notice be given and the particulars of such insurance or insurances be

stated therein or endorsed in this policy pursuant to Section 50 of the

Insurance Code, by or on behalf of the Company before the occurrence

of any loss or damage, all benefits under this policy shall be deemed

forfeited, provided however, that this condition shall not apply whenthe total insurance or insurances in force at the time of the loss or

damage is not more than P200,000.00."

The petitioners stocks were destroyed by fire. He then filed a claim

which was subsequently denied because the petitioners stocks were

covered by two other fire insurance policies for Php 200,000 issued by


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PFIC. The basis of the private respondent's denial was the petitioner's

alleged violation of Condition 3 of the policy.

Geagonia then filed a complaint against the private respondent in the

Insurance Commission for the recovery of P100,000.00 under fire

insurance policy and damages. He claimed thathe knew the existence ofthe other two policies. But, he said that he had no knowledge of the

provision in the private respondent's policy requiring him to inform it of

the prior policies and this requirement was not mentioned to him by the

private respondent's agent.

The Insurance Commission found that the petitioner did not violate

Condition 3 as he had no knowledge of the existence of the two fire

insurance policies obtained from the PFIC; that it was Cebu Tesing

Textiles w/c procured the PFIC policies w/o informing him or securing

his consent; and that Cebu Tesing Textile, as his creditor, had insurable

interest on the stocks.The Insurance Commission then ordered the respondent company to

pay complainant the sum of P100,000.00 with interest and attorneys

fees.

CA reversed the decision of the Insurance Commission because it found

that the petitioner knew of the existence of the two other policies issued

by the PFIC.

Issues:

1. WON the petitioner had not disclosed the two insurancepolicies when he obtained the fire insurance and thereby violated

Condition 3 of the policy.

2. WON he is prohibited from recovering

Held: Yes. No. Petition Granted

Ratio:

1. The court agreed with the CA that the petitioner knew of the prior

policies issued by the PFIC. His letter of 18 January 1991 to the privaterespondent conclusively proves this knowledge. His testimony to the

contrary before the Insurance Commissioner and which the latter relied

upon cannot prevail over a written admission made ante litem motam. It

was, indeed, incredible that he did not know about the prior policies

since these policies were not new or original.


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2. Stated differently, provisions, conditions or exceptions in policies

which tend to work a forfeiture of insurance policies should be

construed most strictly against those for whose benefits they are

inserted, and most favorably toward those against whom they are

intended to operate.With these principles in mind, Condition 3 of the subject policy is not

totally free from ambiguity and must be meticulously analyzed. Such

analysis leads us to conclude that (a) the prohibition applies only to

double insurance, and (b) the nullity of the policy shall only be to the

extent exceeding P200,000.00 of the total policies obtained.

Furthermore, by stating within Condition 3 itself that such condition

shall not apply if the totalinsurance in force at the time of loss does not

exceed P200,000.00, the private respondent was amenable to assume a

co-insurer's liability up to a loss not exceeding P200,000.00. What it had

in mind was to discourage over-insurance. Indeed, the rationale behindthe incorporation of "other insurance" clause in fire policies is to

prevent over-insurance and thus avert the perpetration of fraud. When

a property owner obtains insurance policies from two or more insurers

in a total amount that exceeds the property's value, the insured may

have an inducement to destroy the property for the purpose of

collecting the insurance. The public as well as the insurer is interested

in preventing a situation in which a fire would be profitable to the

insured.

Fortune Insurance and Surety Co., Inc., vs. CA [G.R. No. 115278, May

23, 1995]

Facts: On June 29, 1987, Producers Bank of the Philippinesarmored

vehicle was robbed, in transit, of seven hundred twenty-five thousand

pesos (Php 725,000.00) that it was transferring from its branch in Pasay

to its main branch in Makati. To mitigate their loss, they claim

the amount from their insurer, namely Fortune Insuranceand SuretyCo..

Fortune Insurance, however, assails that the general exemptionclause in

the Casualty Insurance coverage had a general exemptionclause, to wit:

GENERAL EXCEPTIONS
http://coffeeafficionado.blogspot.com/2012/02/fortune-insurance-and-surety-co-inc-vs.htmlhttp://coffeeafficionado.blogspot.com/2012/02/fortune-insurance-and-surety-co-inc-vs.htmlhttp://coffeeafficionado.blogspot.com/2012/02/fortune-insurance-and-surety-co-inc-vs.htmlhttp://coffeeafficionado.blogspot.com/2012/02/fortune-insurance-and-surety-co-inc-vs.html


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The company shall not be liable under this policy in respect of

xxx xxx xxx

(b) any loss caused by any dishonest, fraudulent or criminal act of

the insured or any officer, employee, partner, director, trustee or

authorized representative of the Insured whether acting alone or in

conjunction with others. . . .

And, since the driver (Magalong) and security guard (Atiga) of

thearmored vehicle were charged with three others as liable for the

robbery, Fortune denies Producers Bank of itsinsurance claim.

The trial court and the court appeals ruled in favor of recovery, hence,the case at bar.

Issue:Whether recovery is precluded under the

general exemptionclause.

Held:Yes, recovery is precluded under the general exemptionclause.

Howsoever viewed, Producers entrusted the three with the specific duty

to safely transfer the money to its head office, with Alampay to beresponsible for its custody in transit; Magalong to drive thearmored

vehicle which would carry the money; and Atiga to provide the

needed security for the money, the vehicle, and his two other

companions. In short, for these particular tasks, the three acted as

agents of Producers. A "representative" is defined as one who

represents or stands in the place of another; one who represents others

or another in a special capacity, as an agent, and is interchangeable with

"agent." 23

In view of the foregoing, Fortune is exempt from liability under the

general exceptions clause of the insurance policy.

Documents

Insurance 1-10 Digesttss CALANOC Vs